Principles Of Taxation For Business And Investment Planning 2020 Edition
Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
Question
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Chapter 9, Problem 1QPD
To determine

Explain the consequences.

Expert Solution & Answer
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Explanation of Solution

Even though Company PJ should have expended $700,000 for the 1,000 acres, it does not have a cost basis in the land. Rather, Company PJ is having a substituted basis of only $475,000 (basis of the property Company PJ surrendered in the nontaxable exchange).

Thus, PJ’s recognized gain on sale of the land exceeds the $600,000 appreciation by $225,000.

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Chapter 9 Solutions

Principles Of Taxation For Business And Investment Planning 2020 Edition

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